We have been monitoring the ongoing saga of the Payroll Protection Program. What is clear is banks are not ready for tidal wave of applications heading their way. The bank websites that I visited yesterday (April 2, 2020) were not ready to accept applications starting today, April 3rd.

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The Paycheck Protection Program landing site for my bank currently states “we are working to facilitate your participation in recently enacted federal relief programs…” and, after filling out the contact form, states that a bank “Representative will contact you with next steps.” The FAQ section question about documentation states that “we are waiting for final program details from SBA”.

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In addition, the loan provisions are changing. Yesterday, Secretary of the Treasury announced that the initial loan rates would be 1% rather than the initial .5% just posted a few days ago. The draft SBA Form 2483, Paycheck Protection Program Application Form, discloses a modification to the loan forgiveness provisions “Due to likely high subscription, it is anticipated that not more than twenty-five percent (25%) of the forgiven amount may be for non-payroll costs.” If you want loan forgiveness most of the funds should be spent on payroll. Even though the law allows the use of the loan proceeds for such things as mortgages interest, lease payments, utilities and interest on preexisting loans, the priority is on payroll. I expect many of us looking to cover overhead times are likely to receive loans in amounts below the calculated maximums after processing.

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No wonder the banks are scrambling to keep up. I expect today makes fools out of bankers, business owners and business advisors. Perhaps, April 1st would have been a more appropriate launch date.

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So, what can you do?

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• Millions of business owners will be trying to submit applications today. There will be delays and website crashes beyond your control. There are a lot of people scrambling to make this happen. Just try to remain calm and take control of the things that you can control such as preparing your loan documentation. Don’t give up especially if you and your employees need the money,
• I suggest visiting your bank’s COVID-19 website and filling out the contact information for the loans as soon as possible. It is probably a good idea to continue to monitor the site.
• If you have a good relationship with a business banker, contact them directly. Expect delays in response since they too are working under COVID restrictions. Personally, I am going to put my banker back on the holiday gift list.

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What information should you gather? The best synopsis I have seen has come from PNC bank’s website. The bank suggests that you obtain copies of the following:

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• 2019 IRS Quarterly 940, 941 or 944 payroll returns;
• Payroll report for a 12-month period ending on your most recent payroll date, which includes gross wages to each employee if paid by W2, paid time off for each employee, vacation pay, family leave pay, and state and local tax assessments on employee compensation;
• 1099s for independent contractors for 2019;
• Documentation of all health insurance premiums paid by company; and
• Retirement plan funding documentation for 401(k), SIMPLE, and SEP IRAs.

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In closing, I wish you all the best of luck, stay calm, stay safe. We will all get through this.